Shop prices have fallen on the British high street for the first time since February 2007, as the retail sector revealed a drop of 0.1% last month compared with inflation of 0.5% in July.
According to the British Retail Consortium-Nielsen Shop Price Index, falls in food price inflation had driven the drop in prices. Food inflation eased for the fifth consecutive month, to 2.3% and fell the most on a month-by-month basis since the index began in 2005.
Food inflation reached a peak of 10% last August when food prices increased during the oil and commodity price bubble, but it is now back at the same level it was two years ago. Food price inflation was 2.3% in August compared with 3.8% in July.
Non-food goods stayed below the prices measured 12 months ago, down 1.4%, continuing a trend seen for nine consecutive months.
“The fall has been driven by a huge drop in food inflation - which is now less than a quarter of what it was last August,” said director general of the BRC Stephen Robertson. “This reduction is largely due to commodity prices, such as oil and wheat, falling since last summer’s peak to much lower levels.”